Starbucks punished for raiding workers’ tips

Customers wait for their orders inside a Starbucks in Alameda, Calif., in this 2008 file photo.
Starbucks executives got their hands caught in the tip jar and were ordered this week to pay California baristas more than $100 million.
In a San Diego County class-action lawsuit, a judge ordered the coffee giant to pay back tips and interest that the company had handed over to shift supervisors. Some baristas could receive more than $10,000, according to their attorney.
The ruling was met with cheers by California baristas.
“I’m stoked,” said barista Leekeisha Smith, who makes coffee drinks in the Starbucks at the intersection of Sunset Boulevard and La Brea Avenue in Los Angeles. “Wow. I’m just shocked that we’ll get that (money) back.”
Smith, 23, said she had heard about the lawsuit from a letter sent to employees.
Starbucks Corp. was outraged and vowed to appeal. In a statement, the company said the decision “is not only contrary to law, it is fundamentally unfair and beyond all common sense and reason.”
Starbucks said “our shift supervisors deserve their fair share of the tips that they receive from the tip jars in our California stores.” It plans to “vigorously appeal” and to seek a delay of the court’s ruling prohibiting shift supervisors from receiving tips.
“The decision today in our view represents an extreme example of an abuse of the class-action procedures in California courts,” the company said, noting that the case was filed by a single former barista and that “the interests of the shift supervisors were not represented in this litigation.”
Money collected from tip jars was put into safes at each Starbucks and apportioned weekly to each employee based on the number of hours they worked, according to the suit. The average tip rate distributed to baristas and supervisors was $1.71 per hour, Judge Patricia Cowett said.
Cowett’s ruling said Starbucks’ practice was a violation of a state law that prohibits managers and supervisors from sharing in employee tips. Cowett’s ruling Thursday on penalties followed her Feb. 28 decision in favor of the baristas in the class-action lawsuit.
Former barista Jou Chou complained in a 2004 lawsuit that shift supervisors, who also make coffee and serve customers, were illegally getting a cut of employee tips.
The suit was granted class-action status in 2006 and could affect as many as 100,000 current and former baristas who worked in California stores since October 2000.
“They were subsidizing Starbucks’ labor costs” by helping the company pay its supervisors, said attorney Terry Chapko, who represented the plaintiffs. “This is about getting money back to the lowest-paid employees.”
Another Los Angeles barista, Patrick Patterson, said if he got a cut, he would put the money toward school.
“I’m pretty happy with the money that I make. I’m not greedy,” Patterson, 20, said. “But if I feel like this is money that has been taken away from me, then yes, I deserve it.”
The court ruling and monetary award comes as Starbucks has launched a series of initiatives to transform and boost “the coffee experience” as it copes with weak U.S. sales and a slumping stock price.
Starbucks shares closed this week at $17.53, up 3 cents. The stock has dropped 46 percent in the last year.

